This report was compiled by Jeff Swenson, DATCP Livestock and Meat Specialist.
Corn harvested for grain was 74 percent completed in Wisconsin with the average moisture content being 23 percent as of Sunday, December 8. Nationally 92 percent of corn has been harvested. It’s estimated based on USDA acreage reports that over 6 million acres of corn remains in the field. Soybean harvest in Wisconsin was 88 percent complete.
The new trade deal between the United States, Canada and Mexico (USMCA) has been held up by American politics for over a year. Recent revisions that include enforcement of labor standards, additional environmental protections, lessening of intellectual property protections for pharmaceutical companies and strengthening of dispute settlement provisions have been agreed on by all three countries. The US House of Representatives will likely vote on USMCA next week and its passage is almost certain.
The Senate, however won’t vote until 2020. Agriculture organizations have begun grass roots action to urge the Senate to vote on USMCA sooner. Since USMCA replaces the North American Free Trade Agreement (NAFTA) that went into effect in 1994, NAFTA would need to be repealed before USMCA could be put in place. USMCA is expected to add $2 billion to US agriculture exports. Corn growers and pork producers are expected to be the biggest agricultural winners when USMCA goes into effect.
There appears to be a wave of optimism surrounding a trade agreement with China, with some saying a deal will happen before December 15. That date is significant because that’s when President Trump has announced he will place additional tariffs on Chinese goods. An agreement with China is extremely important to pork producers. The United States is the third largest pork producing country in the world. Pork is an important part of the Chinese diet – in fact pork makes up 60 percent of meat consumption in China.
African Swine Fever (ASF) has caused a shortage of pork in China and a lack of free trade agreements has caused pork supplies in the US to overcome demand. China announced this month that it would waive tariffs on US pork. The tariff on US pork sent to China had been 12 percent, but punitive tariffs of 60 percent were added when the US raised tariffs on Chinese goods coming into the country. The waiving of tariffs on US pork has been touted as a goodwill gesture by China. Some here in the US say its proof that China needs American pork at a time when ASF could wipe out as much as half of their hogs by the end of this year. Pork is expensive in China due to the short supply, and the country began ramping up chicken imports, encouraging its citizens to substitute chicken for pork. President Trump tweeted on Thursday (December 12) that a BIG DEAL with China is very close.
The USDA released its World Agricultural Supply and Demand Estimates report (WASDE) on December 10. Total red meat and poultry production is expected to be higher in 2020. Beef production is expected to be slightly lower, but that will be offset by an increase in chicken production. Futures markets didn’t react much to the report, viewing it as mostly neutral. The WASDE report did give projections on US meat consumption and pegs US beef consumption at just over 57 pounds per person. Per capita pork consumption is expected to increase slightly at 52.6 pounds. Turkey consumption is expected to be 15.8 pounds per person and per capita chicken consumption is expected to increase by over a pound to 97.1 pounds per person.
Japan was an active buyer of US agricultural goods last week with the country buying nearly 11,000 tons of pork and 176,400 tons of corn. The US and Japan finalized a trade agreement last week.
Beef breed fed cattle were steady to a $1.00 higher at auction markets this week, while dairy breed steers were steady. Dairy bull calves are steady to weak with smaller calves struggling to find buyers. The better calves are bringing $30.00 to $80.00/head with reports of a few calves breaking the $100.00/head mark. Beef x dairy calves were bringing $300 per head this summer but are now bringing $100.00 to 175.00/head